GE Capital Asset Services and Trading Asia Pacific Pty Ltd v Rocks Excavations and Plant Hire Pty Ltd

[2003] NSWSC 99

CITATION:	GE Capital Asset Services & Trading Asia Pacific Pty Ltd v Rocks Excavations & Plant Hire Pty Ltd [2003] NSWSC 99
HEARING DATE(S):	10 and 11 February 2003
JUDGMENT DATE:	28 February 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Verdict for plaintiff in detinue or at its election in contract.
CATCHWORDS:	EQUITY [326]- Inadequacy of common law remedies- Chattels- Principles. PROCEDURE [113]- Judgment- Multiple causes of action- Plaintiff to elect after verdict- In default of election tort claim prevails.
LEGISLATION CITED:	Sale of Goods Act 1923 Supreme Court Act 1970, s 93
CASES CITED:	Adventure Film Productions Ltd v Tully (Times, 14.10.82) Aristoc Industries Pty Ltd v RA Wenham (Builders) Pty Ltd [1965] NSWR 581 Attorney General v Sheffield Gas Consumers Company (1853) 2 De GM & G 304; 43 ER 119 Avard v Harrison [1986] ASC 55-525 Badische Anilin und Sode Fabrilk v Hickson [1906] AC 419 Bishop v Montague (1601) Cro Eliz 824; 78 ER 1051 Boyce v Grundy (1830) 28 US 377 Boydell v James (1936) 36 SR (NSW) 620 Brown v Dixon (1786) 1 Term Rep 274; 99 ER 1091 Cochrane v Moore (1890) 25 QBD 57 Colls v Home & Colonial Stores Ltd [1904] AC 179 Cooper v Chitty (1756) 1 Burr 28; 97 ER 166 Dougan v Ley (1946) 71 CLR 142 Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349 Haynes v Hirst (1927) 27 SR (SW) 480 Heavener v Loomes (1924) 34 CLR 306 Howard E Perry & Co Ltd v British Railways Board [1980] 1 WLR 1375 North v Great Northern Railway Co (1860) 2 Giff 64; 66 ER 28 Schering Pty Ltd v Forrest Pharmaceutical Co Pty Ltd [1982] 1 NSWLR 286 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 Somerset (Duke) v Cookson (1735) 3 P Wms 390; 24 ER 1114 Southern Cross Pumps & Irrigation Pty Ltd v Nicholls (1995) 39 NSWLR 501 Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Wallwyn v Lee (1803) 9 Ves 24; 32 ER 509 Welby v Rutland (Duke) (1773) 2 Bro 39; 1 ER 778 Wood v Sutcliffe (1851) 2 Sim (NS) 163; 61 ER 303
PARTIES :	GE Capital Asset Services & Trading Asia Pacific Pty Limited (P) Rocks Excavations & Plant Hire Pty Limited (D1) Rocks Services Pty Limited (D2) Niel William English (D3)
FILE NUMBER(S):	SC 5401/02
COUNSEL:	S T White (P) D Brezniak (D)
SOLICITORS:	Kemp Strang (P)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 28 February 2003

5401/02 – GE CAPITAL ASSET SERVICES & TRADING ASIA PACIFIC PTY LTD v ROCKS EXCAVATIONS & PLANT HIRE PTY LTD

JUDGMENT

1 HIS HONOUR: The basic question in this case is whether the plaintiff, a finance company, is able to obtain an order that the defendants specially hand over to it various pieces of building plant and equipment.

2 The history of the matter is that in late 2001, when the first defendant was in administration it needed $550,000 to pay something to its then pressing creditors. It obtained that sum by agreeing to sell the plant and equipment to the plaintiff for $550,000, which it did by what was entitled a "Capital Assist" Sale Agreement dated 13 November 2001. There were side agreements whereby the plant and equipment was leased back to the first defendant and the first defendant was given an option to purchase it.

3 The option to purchase was exercised but the first defendant was unable to complete. The plaintiff then purported to bring that contract to an end.

4 The first defendant says, and the plaintiff denies, that there was yet another collateral deal, and that was that the plaintiff would refinance the first defendant so that it could repurchase the property from the plaintiff.

5 I assume that there were then some negotiations and, as a result, on 8 August 2002, the parties entered into three more agreements, viz: (a) a new agreement to sell the plant and equipment to the first defendant for $660,000 with completion on 23 August 2002; (b) a hiring agreement of the goods until that date; and (c) a licence agreement permitting the plaintiff to have access to the land of the second defendant where the goods were usually kept.

6 The sale was not completed by 23 August. The plaintiff purported to terminate the sale agreement and sought possession of the goods. This was not forthcoming. On 2 November 2002, it commenced proceedings against the defendants. The defendants include the guarantor of the first defendant.

7 The hearing of the proceedings commenced before me on 10 February 2003. When it began, the defendants were unrepresented by any member of the legal profession. I permitted representation of the first defendant by a director who was the same person as the third defendant, and permitted Mr C Howard Smith, the general manager of the first defendant to assist the third defendant as a Mackenzie friend.

8 On the second day, Mr Brezniak of counsel appeared for all three defendants. I was off the bench for a considerable time for the first one and a half days while the parties endeavoured to arrange some commercial settlement, but no result was reached and accordingly, I heard the case in full.

9 When I say "heard the case in full", there was really not that much to hear. The defendants' case that the plaintiff had agreed by its agent Mr Ian Brierley of Access Corporation Ltd to refinance by advancing moneys to consummate the sale agreement failed in limine. There was no evidence that Mr Brierley was ever appointed agent of the plaintiff for this purpose or that he said anything within his authority to bind the plaintiff. Mr Brierley was not called, though I was told he was subpoenaed by the defendants. Further, the defendants' cross examination of Mr Wall, the plaintiff's general manager, elicited a firm denial that such was the case.

10 The questions that accordingly arose for determination were whether the plaintiff had proved its case, and if it had, to what relief was it entitled?

11 The statement of claim appears to contain four causes of action, viz: (a) detinue; (b) conversion; (c) breach of contract; and (d) specific restitution of the plant and equipment in equity.

12 The first matter of concern was what property at law was vested in the plaintiff in the plant and equipment.

13 The plant and equipment must be classed as corporeal chattels. At common law, property in corporeal chattels can only pass by deed or delivery except in the case of a sale of goods; see eg Cochrane v Moore (1890) 25 QBD 57. The Sale of Goods Act, 1923 and cases such as Badische Anilin und Sode Fabrilk v Hickson [1906] AC 419, 424 clearly show that a sale for valuable consideration of ascertained goods is an exception to the general rule.

14 The capital assist sale agreement was not a deed. Thus, the only way in which legal title to the goods would have passed is if the transaction can be classed as a sale of goods within the meaning of the Sale of Goods Act, 1923.

15 There is no evidence of any actual delivery of the plant and equipment to the plaintiff. Thus, I need to consider whether the first set of transactions involved a sale of goods which would pass title to the plaintiff.

16 The capital assist sale agreement of 13 November 2001 between the plaintiff of the first part, the first defendant of the second part and the third defendant of the third part, recited that the first defendant was the owner of the equipment and the plaintiff had agreed to purchase it and to rent it back. Clause 3 of the agreement provided that completion would take place at the plaintiff's office and that the title and risk in the equipment would pass to the plaintiff with effect from completion subject to any rental agreement which may pass the risk back to the company. Clause 3.3 provided that prior to or on completion, the first defendant "must give GE (the plaintiff) possession of the equipment. The company (ie the first defendant) shall be deemed by virtue of having complied with its obligations under this clause 3.3 to have delivered the equipment to GE and shall not be required to physically deliver the equipment to GE …".

17 The form of the agreement is that of a sale of goods. The question that arose in my mind during the hearing and which was not fully laid to rest was whether the combined effect of the sale of goods, hiring back and option to repurchase agreement, together amounted to a mortgage and that whether the whole of the circumstances showed that the parties always intended that the transfer be by way of security only and not by way of absolute sale.

18 There are a series of cases of which a good example is Boydell v James (1936) 36 SR (NSW) 620, where illustrations are given, particularly per the Chief Justice at 626 of cases of sales and options to repurchase being held to be part of an interdependent transaction and together amounting to a mortgage or loan.

19 However, the Chief Justice at 626 makes it clear that one has to distinguish between situations where the parties have intended that their documents should be the real transaction and cases where they are set up as a pretence to cloak a loan. In the latter situation, the only real transaction is the loan (p 627). See also Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449.

20 I must confess that at the oral hearing Mr Simon White for the plaintiff, endeavoured to convince me that I should not classify this series of transactions as one interdependent transaction and a mortgage. He was then unsuccessful. However, having reread the material, it seems to me that having rejected the contention that there was a further deal between the parties that the finance company would refinance the second purchase, there is nothing in the circumstances which would show that the transaction was other than what the documents showed save and except the inference that might be drawn from a finance company using common form documents to bail out companies under administration. It seems to me that there has to be a little more than this before one can classify the transaction as not being what the documents purport it to be. Further, it is open to parties, apart from parties who create a sham transaction, to use whatever route they like to come to the ultimate commercial benefit to them both.

21 Accordingly, I consider I should not treat the transaction as a mortgage in which case it must be a sale of goods and in which case property passed as per the intention of the parties pursuant to s 22 of the Sale of Goods Act 1923.

22 Having reached that point I can then discard any argument that depends on there being any rights in the nature of an equity of redemption in the first defendant.

23 One can then deal with the documents of 8 August 2002 on their face. It is necessary to set out some of the provisions of these documents.

24 The sale agreement of 8 August 2002 is between the plaintiff of the first part, the first defendant of the second part, and the third defendant of the third part. It contains an agreement by the plaintiff to sell the plant and equipment to the first defendant for $660,000. Clause 3 says completion must take place on the completion date, namely 23 August 2002 in respect of which time is of the essence. The agreement is guaranteed by the third defendant.

25 The second agreement is an equipment rental agreement. The parties are the same. The commencement date is 25 June 2002, the expiration date 23 August 2002 "which is an essential date" and the rent $825 per week.

26 The equipment rental agreement defines “the Company” as the first defendant, the Guarantor as the third defendant and the plaintiff as “GE”.

27 Clause 17 of the equipment rental agreement provides that:

"Upon the Expiration Date, the Company shall, at its own cost, deliver and, if necessary, assemble the Equipment at a place designated in writing by GE (designated as 66 Edward Street Riverstone) … and surrender possession of the Equipment to GE".

28 Clause 16.4 provides:

"Notwithstanding any other terms of this Agreement, the Company agrees (in consideration of GE renting the Equipment to the Company pursuant to this Agreement) that upon the expiration or sooner determination of this Agreement, GE shall be entitled, for a period of 6 weeks from the date of expiration or sooner determination, without payment of any rent or other monies, to exclusive occupation of the Land for all purposes. Without limiting its rights GE shall be entitled to conduct a sale of the Equipment, by any means GE determines, from and upon the Land and remove the Equipment from the Land and GE and its servants, agents, contractors, prospective buyers and other invitees of GE shall be entitled to enter and remain upon the Land for all such purposes. GE shall have no obligation to make good the Land following the sale and/or removal of the Equipment from the Land and the Company releases GE from all claims, actions or remedies which the Company may have against GE but for this clause in respect of any damage to the Land howsoever caused and of whatever nature, including any consequential loss to the Company, whether caused by GE or any of GE's servants, agents, contractors, prospective buyers and other invitees or otherwise during GE's occupation of the Land."

29 Clause 22.1(c) provides that the third defendant indemnified the plaintiff against any loss it might suffer "by reason of the rent not being paid … or any breach of covenant, liability, condition, obligation and liability under this Agreement".

30 There was a third document, a deed, between the plaintiff and the first and second defendants in which the second defendant as owner of the Riverstone address gave the plaintiff certain rights within six weeks of 23 August 2002 to enter its land.

31 It is common ground that completion did not so take place.

32 The plaintiff gave a notice of termination of the sale agreement, which is PX239. The operative part was:

"The Vendor now gives you notice that -
1. The Sale Agreement is hereby terminated.
2. The Vendor reserves its rights to claim all loss and damage and any other remedy that it may have in respect of the Purchaser's breach of the Sale Agreement and/or the termination of the Sale Agreement, including any claim against the Guarantor.
Dated this 5th day of September 2002."

33 The plaintiff also gave a notice on the same day that:

"1. The Equipment Rental Agreement has expired.
2. Rocks (meaning thereby the first defendant) should immediately re-deliver the Equipment to GE (meaning the plaintiff) at 66 Edward Street Riverstone NSW 2765 at Rocks' own expense in accordance with the provisions of clause 17 of the Equipment Rental Agreement.
3. GE reserves all its rights under the Equipment Rental Agreement or at law or equity including without limitation in the event that Rocks fails to redeliver the Equipment as demanded."

34 The notice of termination was only in respect of the sale agreement; it was not in respect of the rental agreement.

35 It will be observed that the notice of termination reserves the plaintiff's rights to claim all loss and damage and other remedy in respect of the breach.

36 Termination puts an end to an agreement, at least so far as the obligation of the parties in the future is concerned. One cannot have a “without prejudice termination”; see Haynes v Hirst (1927) 27 SR (NSW) 480. Thus, insofar as the termination is subject to reservation of rights, this can only be consistent with termination if the reservation is read as referring only to rights then accrued.

37 The plaintiff's summons was issued on 6 November 2002. It sought a declaration that it was the owner of the goods, a declaration that the first defendant was wrongfully detaining or converting the goods and an order that it deliver the goods plus an order that the first defendant pay the plaintiff $660,000 pursuant to the sale agreement.

38 The defendants filed a cross claim which, for the reasons I have already set forth (in para 9 of this judgment), must fail.

39 In due course the plaintiff filed a statement of claim. In its amended form, the prayers were as follows:

1. A declaration that the plaintiff is the legal and beneficial owner of and is entitled to immediate possession of the Equipment ("the Equipment").

2. A declaration that the first defendant is wrongfully detaining or converting the Equipment.

3. An order that the first defendant deliver forthwith the Equipment to the Premises.

4. In the alternative, an order that the first defendant make specific restitution of the Equipment to the plaintiff by delivery of the Equipment to the Premises.

5. An order that the second defendant grant the plaintiff immediate access to the Premises to allow the plaintiff to inspect the Equipment, to conduct an on-site auction of the Equipment (or part thereof), and/or to remove the Equipment (or part thereof) from the Premises.

6. In the alternative, an order that the first defendant pay the Plaintiff the sum of $660,000.00.

7. An order that the third defendant pay the plaintiff the sum of $660,000.00 pursuant to the Sale Agreement dated 8 August 2002.

8. Damages.

9. An order that the first defendant account to the plaintiff for any profits earned from the use of the Equipment.

10. A declaration that the plaintiff has validly terminated the Sale Agreement dated 8 August 2002 between the plaintiff, the first defendant and the third defendant ("the Sale Agreement").

11. A declaration that the first defendant has breached the Sale Agreement.

12. A declaration that the third defendant as guarantor is liable to indemnify the plaintiff for any losses or damages sustained by the plaintiff by reason of the said breach.

13. An Order that the proceedings be referred to a Master to assess damages occasioned by reason of the said breach.

14. An order the defendants pay the plaintiff's costs.

15. Such other order as this Honourable Court deems fit.

40 It can be seen that this hodge pot of orders cannot all be made and some are alternative to others and some are inconsistent with others. However, the only simplification was that Mr White elected against conversion during the oral argument.

41 It is probably convenient to deal with prayer 10 first, that is, the meaning of the notice of termination.

42 A person may bring a contract to an end pursuant to a provision of the contract by going through the prescribed procedure.

43 The sale agreement was a commercial contract, time was probably of the essence, but the contract actually said that time was of the essence. No argument has been put before me as to why time was not of the essence. The agreement was not completed by the due date. No reason has been put to me as to why the termination was not valid. Accordingly, prayer 10 in the statement of claim should be granted.

44 The next question is whether the plaintiff is entitled under its action in detinue to a specific restoration of the goods. Once I have dealt with that question I then have to consider if it is answered in the negative whether there is some corresponding equitable right and then I need to consider how far the plaintiff can also proceed with its claim for damages for breach of the rental agreement.

45 Although the statement of claim claims $660,000, the whole thrust of the plaintiff's case was that it wants the goods, not the money. However, the reason for this is not that the plaintiff wants to possess or enjoy the goods, but rather because it sees their return as the optimum way of extracting the maximum amount of money from the transaction.

46 Detinue is a very ancient remedy. It was one of the first writs to emerge in the King's Courts, but this was its undoing in a way because it was tried before the Common Pleas by way of wager of law. Accordingly, the action of conversion, which was tried before a jury in the King's Bench, superseded it to a great extent, and indeed, some commentators say almost exclusively.

47 However, detinue and conversion are basically quite different. Conversion was a personal action which gave damages virtually on the basis of a forced sale to the person who had interfered with the plaintiff's goods. On the other hand, detinue gave the plaintiff back its goods together with damages for their detention.

48 Up until 1854 in England, a defect with detinue was the form of judgment. This was that the defendant, at its option, return the goods or pay their value. In England in 1854 the provision that is now s 93 of the Supreme Court Act, 1970 was introduced allowing the Court of Common Law to make an order for specific return of the goods without the option of paying their value which order was enforced by the appropriate writ directed to the Sheriff.

49 Before 1854, a person who wished to have his or her goods returned in specie had to go to Equity. The effect of the 1854 amendment was that the Court at Common Law could do exactly the same as the Court of Equity could have done before 1854. Accordingly, the discretion of the Court under s 93 of the Supreme Court Act 1970 is exactly the same as if the Court in Equity was considering whether it should make an order for specific restitution of the goods.

50 This does not of course mean that the position at law in NSW at 2003 is exactly the same as was the jurisdiction of equity in 1854. The common law takes on all the developments made in equity since then. The point being made is that there is no difference in the tests that a common law judge applies under s 93 of the Supreme Court Act, 1970 to those an equity judge would apply if faced with an application for specific restitution of goods.

51 According to the early 19th century equity books, the jurisdiction exercised by Equity was based on the proposition that the Common Law contained imperfection as to its remedy and thus Equity would intervene; see Maddock, Practice of the High Court of Chancery vol 1 (1820) p 233 (2nd edition) and Mitford on Chancery Pleadings 5th ed 1847 p 139, both learned authors basing their statement on what was said by Lord Eldon LC in Wallwyn v Lee (1803) 9 Ves 24, 33; 32 ER 509, 512.

52 It must be remembered that, at this time, it was a matter of jurisdiction that the remedy at law be imperfect. As Isaacs and Rich JJ said in Heavener v Loomes (1924) 34 CLR 306, 325:

“where the title sued upon is purely legal, some equity must be shown to justify the intervention of the Court, such as ‘an injustice irremediable by a court of law’.”

The quote is from Welby v Rutland (Duke) (1773) 2 Bro 39, 42; 1 ER 778, 779.

53 Pomeroy’s Equity Jurisprudence, 5th ed at para 185 pp 265-6 of vol 1 puts the test that equity only gives specific relief in the case of chattels in cases where, "the only relief which the plaintiff can have is possession of the identical thing, and this remedy cannot with certainty be obtained by any common law action".

54 There are very few reported decisions before 1854 as to when Equity would grant the remedy of specific restitution of chattels and, in virtually every reported case, equity acted because the chattel was of some special nature such as a silver altar piece: Somerset (Duke) v Cookson (1735) 3 P Wms 390; 24 ER 1114.

55 However, latter day cases have shown that Equity gives relief in a wider set of circumstances than merely unique chattels and that the touchstone for relief is whether damages are an adequate remedy. The leading modern Australian authorities are Aristoc Industries Pty Ltd v RA Wenham (Builders) Pty Ltd [1965] NSWR 581, 587-590 and Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591. In the latter case at 597 Hope J said, with reference to the list of cases in the 3rd ed vol 38 p 803 of Halsbury's Laws of England (because England has changed the law there is no corresponding section in the 4th edition):

"Many of these cases deal with chattels which had a very peculiar or sentimental value which obviously could not be adequately reflected in a monetary award, and it has been submitted that the jurisdiction of the Equity Court is limited to this class of case. I do not think that the jurisdiction is so limited … ".

His Honour referred to Aristoc which concerned seats in a theatre, North v Great Northern Railway Co (1860) 2 Giff 64; 66 ER 28 (railway wagons) and Dougan v Ley (1946) 71 CLR 142 (a taxi cab plate).

56 In Avard v Harrison (M H McLelland J, 1 December 1986) [1986] ASC 55-525, a finance company repossessed the plaintiff's bull-dozer even though he had paid the final instalment. The Judge ordered specific restitution of the bull-dozer, (a) because the bull-dozer had a custom made cutter bar which would take considerable time to remanufacture and fit to another bull-dozer; and (b) because the valuation of the bull-dozer at the time of its seizure by the finance company would present very substantial difficulties. It was therefore a considerable injustice to Mr Avard to leave him to a remedy in damages and there should thus be an order for specific restitution.

57 In Adventure Film Productions Ltd v Tully Times 14 October 1982, an order was made in respect of a film that the defendant said he held in protective custody because it would take an immense amount of time and money to remake the film. Again in Howard E Perry & Co Ltd v British Railways Board [1980] 1 WLR 1375, at a time of great shortage of steel, an order was made that a parcel of steel which normally would not be classed as a special chattel be delivered up. The former case at least shows that the consideration as to whether the remedy at law is sufficient is not restricted to the nature of the chattel involved.

58 Mr White says that an order for specific restitution of a chattel will be made when damages are not an adequate remedy. He puts that, in this connection, this occurs not only in cases where the intrinsic nature of the chattel makes it unique, but also in cases where damages may not be an adequate remedy because of the doubtful solvency of the defendant. He has not been able to point to any direct authority for that proposition, but says that it follows from Bronotte's case and the other cases I have just considered.

59 Mr White's proposition is that there must be some great doubt as to whether the defendants will be able to satisfy any judgment in damages and accordingly judgment for damages are not an adequate remedy. Thus it is necessary for the plaintiff to recover the goods back, sell them, and then recover the damages as per the lease agreement, that is, the difference in value of the goods as certified in the lease agreement and the amount received at auction.

60 I will first consider the proposition as a matter of law and, if it is established, then consider whether on the facts of this case, it can be said that the first defendant or its guarantor, the third defendant are of doubtful solvency.

61 There is no doubt that in many cases the fact that the defendant is of doubtful solvency will operate so that the court will hold that an award of damages will not be an adequate remedy; see eg Schering Pty Ltd v Forrest Pharmaceutical Co Pty Ltd [1982] 1 NSWLR 286.

62 As Gummow J, writing extrajudicially said in his article, The Injunction in Aid of Legal Rights - An Australian Perspective (1993) 56 Law & Contemporary Problems 83, 93:

“The legal remedy may be inadequate not for any intrinsic reason, but because of the financial circumstances of the defendant.”

63 In Boyce v Grundy (1830) 28 US 377, 378, the Court said:

“It is not enough that there is a remedy at law; it must be plain and adequate, or in other words, as practical and efficient to the ends of justice and its prompt administration, as the remedy in equity.”

64 When equity says that it does not interfere unless damages are not an adequate remedy it does not mean that one looks to see what are the damages that would be attributable to a particular cause of action. What equity looks to is whether the facts which are proved could at common law be the subject of proper remedy.

65 Accordingly, when one has facts which could justify counts in detinue, conversion or breach of contract and when one can see that allied to the action in breach of contract, there may be an injunction granted under what used to be called the auxiliary jurisdiction of the Equity Court in aid of the contractual remedy of damages, then one can conclude that damages are an adequate remedy.

66 One of the leading passages as to when common law remedies are adequate, comes from the judgment of Turner LJ in Attorney General v Sheffield Gas Consumers Company (1853) 2 De G M & G 304, 321; 43 ER 119, 126, where his Lordship said:

'"The question therefore which we have to consider appears to me to be whether this is a case in which the remedy at law is so inadequate that the Court ought to interfere, having regard to the legal remedy, the rights and interests of the parties, and the consequence of this Court's interference."

67 So in Wood v Sutcliffe (1851) 2 Sim (NS) 163, 168-9; 61 ER 303, 305, Kindersley VC said:

"Another condition which … is necessary in order to induce a Court of Equity to interfere by injunction … is that the mischief complained of is such that cannot be properly and adequately compensated by pecuniary damages. … On the ground, therefore, that the Plaintiffs themselves have shewn that the injury they complain is one which, in some way, may be compensated by money … I ought not to grant the injunction."

His Lordship was speaking in terms of the mischief of the injury rather than the cause of action at law.

68 In Colls v Home & Colonial Stores Ltd [1904] AC 179, 193, Lord Macnaghten said:

"In some cases, of course, an injunction is necessary – if, for instance, the injury cannot be fairly compensated by money …".

His Lordship talks about the injury rather than the cause of action.

69 In most cases, of course, the cause of action and the injury will be co-terminous, but, where, as in the instant case, there are three causes of action (detinue, conversion and breach of the hiring agreement) which cover the ground, one asks whether the remedy given by law in respect of all three is adequate before one gives equitable relief in any.

70 Almost all the authorities to which I have referred in the previous half dozen paragraphs were decided at a time when it was vital to the jurisdiction of a court of equity to establish that common law could give no or only an incomplete remedy to a deserving plaintiff. Now that law and equity are administered in the one court, it has become more fashionable to say that one should not assume that damages will be the normal remedy and that the court should award whichever remedy meets the justice of the case; see eg Laycock, The Triumph of Equity, (1993) 56 Law & Contemporary Problems 53, 59 and Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349, 379.

71 However, equity only grants that equitable remedy which is the minimum necessary to do justice.

72 The minimum equity would not be to grant specific restitution, but to grant an injunction to police the implied negative covenant in the equipment rental agreement clauses 16 and 17 that the defendants would not do anything to prevent the plaintiff exercising its rights to repossess.

73 As Hope J pointed out in Bronotte's case, this is completely different relief to the obtaining of specific restitution of the goods in equity. Indeed, this sort of injunction was the relief that was granted, or might have been granted in the Aristoc case referred to earlier, and also was the basis of my decision in Southern Cross Pumps & Irrigation Pty Ltd v Nicholls (1995) 39 NSWLR 501.

74 However, to date such an injunction has not been sought.

75 There is very little material to suggest that the defendants are impecunious. The fact that the first defendant has recently been under administration and has twice failed to complete a sale agreement which it was anxious to complete point in that direction.

76 However, the third defendant, the guarantor, says that his house has been sold and that it will be only another month before the proceeds are available and he can pay out the plaintiff.

77 Mr White’s preferred position is to obtain a specific order in detinue, repossess the goods, sell them and then have the damages assessed.

78 There are a number of difficulties in taking this broad brush approach.

79 The first is that it would appear that it is not permissible in the one action to obtain a verdict in both detinue and in breach of contract.

80 The reason for trying the count in trespass first and not dealing with assumpsit until trespass had either been waived or found against the plaintiff appears to have its origin in the technicalities which were adopted to protect defendants when conversion ousted trespass to goods; see Cooper v Chitty (1756) 1 Burr 28, 31; 97 ER 166, 168. It was considered that trespass was the more serious tort and had to be waived before one could succeed in conversion. One could qualify but not increase a tort: Bishop v Montague (1601) Cro Eliz 824; 78 ER 1051. Later the same reasoning applied when the plaintiff sought to sue in assumpsit, Holdsworth, History of English Law Vol 7 p 418. As Holdsworth says at op cit 437, the problem came about because contract law had to develop under the guise of the action on the case in assumpsit which was basically tortious.

81 The court required the plaintiff to elect to waive the trespass and sue in conversion or waive the tort and sue in contract.

82 This principle is really a case of election between inconsistent remedies. Indeed, it seems to me that this is the way it is treated in Chitty on Pleadings 5th ed 1831, pp 223 and following. Particularly one could not join a count in assumpsit and trover: Brown v Dixon (1786) 1 Term Rep 274, 277; 99 ER 1091, 1092.

83 In United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 42, Lord Porter said:

"The original ground of objection to pleading in assumpsit and tort in the same action was that counts in these two forms (of action) could not be joined, but that the plaintiff had his election, could sue in tort or could affirm the tortious act and thereby preclude himself from so suing."

84 This passage was applied by the Full Court of this Court in Suttons Motors Pty Ltd v Campbell (1956) 56 SR (NSW) 304 that there cannot be judgment given in alternate claims in contract and tort, but that before judgment is signed the plaintiff must elect. This case is binding on me.

85 The modern procedure under the Supreme Court Rules Part 8 is that the defendant, if it considers itself embarrassed by joinder of causes of action should apply for directions such as putting the plaintiff to elections or postponing issues.

86 In the present case, the defendants have not so applied. It is thus necessary to make orders at the trial to sort out procedural problems.

87 It follows, however, from what I have said, that in some sense or other the plaintiff is successful in these proceedings. All that needs to be moulded is the precise remedy to which the plaintiff is entitled.

88 I consider that it is necessary to publish these reasons and then require the plaintiff to elect as to its remedies.

89 If no election is made, it seems to me that for historical reasons, I must deal with the tortious count first. If I need to do this, I would indicate my view that in the light of other remedies available, I should not make a mandatory order for return of the goods, but order that the first defendant return the goods or pay their value plus pay damages for detention as assessed by a Master.

90 In view of the fact that the plaintiff merely wishes to recover its money, such an order may be sufficient for its purposes.

91 If the plaintiff wishes to elect for damages for conversion or a remedy in contract, I consider, in the light of the above, that the plaintiff should be permitted to change its election it has already provisionally made.

92 I do consider that, if the actions in tort are abandoned, it is appropriate to make an injunction as indicated above and to refer the question of the damages for breach of the equipment rental agreement to a Master for assessment.

93 Accordingly, in my view I should merely publish these reasons, leave it then to the plaintiff to make a final election as to what remedy it will have, and make orders as necessary following the election.

94 I will have the matter listed on Tuesday 11 March 2003 at 9.30 am to consider the plaintiff's election. However, if the matter is to last more than 10 minutes it may be some special day will have to be found for it. Again, if 11 March is inconvenient to counsel and they communicate with my Associate at least two days before, some other date can be chosen.

95 The interim injunctions and undertakings, of course, continue in the meantime.

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Last Modified: 03/03/2003